North Bridge: the crisis has led to a 20% decline of Romanian companies' value

The financial crisis has caused a 20% decline of companies’ ratings since the beginning of the year, said Ovidiu Morariu, manager of North Bridge for Romania, private equity fund with 20 million euros budget for investment in Romanian companies.

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First transaction in the factoring market

“At present we are negotiating two loans that we started in spring, whereas our expectations towards these companies dropped 20%,” said Ovidiu Morariu (photo), adding that in this period, private equity funds afford being more selective with the companies available for takeover.

He added that North Bridge is no longer considering making any investment in the real estate segment, focusing activity on agriculture, food industry, medical care services, and financial services.

At present, North Bridge has 320 million euros worth assets portfolios under management. The company was founded in 2004 and holds three branches, in London, Bucharest and Oslo.

British-based fund North Bridge acquired 29% stake in Romanian Next Capital Factoring for 4 million euros and forecasts 20 million euros investment in Romania until 2009.

“The acquisition was carried out through the capital raise of Next Capital Factoring to 2 million euros,” said managing director of Next Capital Factoring, Bogdan Rosu.

Up to now, North Bridge’s overall investments in Romania amounted to 60 million euros.

“The invested equity funds are designed to company’s development, namely the growth of funding volume and number of clients, as well as broadening the service pool in 2009. Next year we plan on implementing a new factoring service for export and import activities,” Rosu added.

According to investment manager of Next Capital, the company will direct the money from the loan towards territorial expansion as well. Therefore, the company opened a new office in Cluj and considers opening three more branches next year in order to have a better country coverage.

20 million euros budget for investment

North Bridge considers investing another 10 million euros in agricultural projects and in food industry, and overall investments estimated for 2009 mount to 20 million euros.

Next Capital Factoring is a non-banking financial institution, licensed by the national banking regulatory (BNR) in November 2006, and it is specialized in factoring operations for small and medium-sized companies in Romania.

Next Capital Factoring finances up to 85% of the accounts receivables sold by the clients within 24 hours since the contract was signed, while the rest of the money are transferred at the falling due of invoices.

The factoring commission and interest charged by Next Capital hovers between 2% and 5% of the invoice’s value giving the funding date. The interest is calculated according to three-months benchmark interest ROBOR, adding a company margin.

“There was no case of payment failure, only delays”, Bogdan Rosu added. The company forecasts for this year overall loans of nearly 20 million euros, fourfold higher than 2007.